September 14, 2023
* currencies & metals drift a bit on Wednesday…
* Scarcity is the new word with regards to Oil…
Good Day… And a Tub Thumpin’ Thursday to one and all! I get knocked down, but I get up again, nothings gonna keep me down! I’ve loved this song since the first time I ever heard it… It described me! And I love the term: Tub Thumpin’! If that doesn’t make you think of a good time being had by all, then, well… I guess I’ll have to try harder to convince you! My beloved Cardinals won again in Baltimore last night, this time by 1-0… a pitching duel… You can’t say “Pitcher’s duel” any longer, because by the 6th inning, the starter is out of the game! And that’s only if he’s pitching a good game that he’ll be allowed to go that far! Ahhh, for the days of Warren Spahn, and Jaun Marichial… The both were the starters that finished the game that ended in the 15th inning! They don’t make pitchers like that any longer, folks… Shoot Bob Gibson won 251 games in his career, and had 255 complete games! Now that’s a pitcher! Steely Dan greets me this morning with their song: Aja… (one of my all time fave albums!)
Well, the dollar drifted yesterday, starting the day up 2 index points from th overnight trading, it spent the rest of the day fending off sellers… Yes, the traders wanted to sell dollars, but, were hesitant about doing so, and so the dollar drifted throughout the day… The BBDXY ended up losing 2 index points on the day… The euro was being held back from gaining VS the dollar until traders see what the ECB is going to do this morning at their meeting. Gold never found a bid all day, and the short paper traders kept the lid on the shiny metal. Gold lost $4.90 on the day to end the day at $1,908.90, and Silver lost 24-cents to end the day at $22.91…
Even the drastically watered down, hedonically adjusted stupid CPI showed that consumer inflation rose in August from July on an annual basis, August CPI was 3.7%, VS July CPI 3.2%… So… if the this stupid CPI report shows a gain in inflation, then real inflation was on the move to higher ground too… Shadowstats.com shows CPI at 12.5%, when calculated the way they did it in 1980, before all the hedonic adjustments were added… Now, that news along should have sent Gold soaring higher, but when you have a governor on your speed, well, it’s difficult to get started, and that’s what happened to Gold yesterday…
The price of Oil remained with an $88 handle yesterday, at one point in the day, it hit $90 briefly, but then backed off, probably from profit taking… I can’t stress enough the point I made earlier this week, about how the Saudi production cuts hadn’t been felt yet… The demand for Oil is soaring, (summer driving season), and the production is getting cut… That’s the recipe for a higher price for Oil folks… and that higher price of Oil will fuel, higher prices for all the things that Oil touches… like plastics, etc.
And with inflation rising some mental giant decided to buy bonds… The 10-year lost 9 BPS of yield yesterday, and ended the day with a 4.22% yield…
In the overnight markets last night… There was more drifting, but the overall direction for the dollar was downward, as the BBDXY has lost 1 index point from yesterday’s close, and starts today at 1,249… The stronger stupid CPI yesterday, has traders thinking that the Fed will remain hawkish… Hmmm, I wonder where they got that idea? Numskulls, they have to be led to the water, and then shown how to drink it! So, that hawkish stance has really been a pain in the rear for Gold & Silver… Sure they should be rising because inflation is rising again, but they aren’t being allowed to rise at this point… Gold this morning is starting the day down $1, and Silver has given up 31-cents! Silver has really taken the brunt of this downward movement of these two metals…
Here’s Ed Steer’s thoughts on Silver from his newsletter this morning that can be found here: www.edsteergoldsilver.com “This is a ‘blood out of stone’ moment for silver because — as stated previously, there are limits to how many long positions that the Managed Money traders et al. are prepared to sell — and how many short contracts their prepared to put on. As Ted pointed out in his mid-week commentary for his paying subscribers yesterday, we’ve pretty much reached that point now.
Once there, the commercial traders can blow their brains out trying to engineer the silver price lower…but if the Managed Money traders et al. aren’t prepared to sell, then the bottom is in…because it’s their act of selling long positions or going short, that drives prices lower. If they ain’t going to do that no more, the collusive commercial traders have to give up — and they know it.”
Chuck again… I sure hope that this all happens while I’m still on earth…
The price of Oil has bumped higher in the $89 handle this morning… Scarcity is the buzzword that’s being tossed about with regards to Oil… I’ll repeat myself here, but it’s good to see an asset trading on fundamentals… The 10-year’s yield has increased overnight, and starts today with a 4.26% yield… Back and forth, back and forth… when will this end?
The Big News this morning is the ECB meeting that’s taking place while I write… I doubt there’s been any announcement before I hit send this morning, so we’ll talk about it next Monday, God willing and the Creek don’t rise… on a side bar, The Creek references the Indians, not the stream… So, that right there tells you how old that saying is! I told you yesterday, that there are ECB members that were singing from different song sheets, regarding whether the ECB should hike rates are not… To me, and to anyone that’s associated with Germany’s Bundesbank, the answer to that question is a layup… Yes, rates should go higher… But the ECB has the Club Med Countries that seem to fly by the seat of their pants, and I’m sure they are a big fat NO! This is when we’ll see just how much influence and what kind of strong hold the Germans have on the ECB…
Longtime reader, Bob, sent me this last night, and it opened my eye for sure! This is from the mises.org site: “The Federal Reserve has officially reported a loss of $57 billion for the first six months of 2023. Quite a number! So the “Federal Reserve Banks Combined Quarterly Financial Report as of June 30, 2023” (CQFR)—a little-known document—is especially notable for its red ink. We can anticipate an annual loss of over $100 billion for 2023 and for the losses to continue into 2024.”
Chuck again… it’s the same old story here… The Fed/ Cabal/ Cartel bought tons of low yielding bonds for years, and those bad bonds are coming home to roost… and you know what a chicken coop looks like? I’m just saying…
The U.S. Data Cupboard today has the PPI print (wholesale inflation that leads into consumer inflation) and the August Retail Sales, whcih I already told you earlier this week that the BHI indicates that this report will be disappointing… So, we’ll see who’s correct! But with all the Back-to-school sales in the books in July, August seemed to have fallen on its face… At least that’s the view from the BHI….
Circling back to the top today, the stupid CPI was much stronger in August than July, and providing the proof that’s in the pudding that I’ve been saying and that is that inflation is sticky, and isn’t going away, until the Fed Heads decide to take interest rates above the rate of inflation… real inflation, not the trumped-up stupid CPI inflation!
To recap… the dollar started the day yesterday having gained 2 index points overnight, but then drifted throughout the day on Wednesday… Gold couldn’t find a bid, and neither could Silver, and both booked losses on the day Wednesday… The stupid CPI printed and showed a gain month to month that hadn’t been seen in 14 months! The spin doctors immediately pointed to the price of Oil as the main price gain, and tried to show that the rest of the components of the inflation basket were not as pricey… I don’t care what they try to do to spin this story, but food and energy are things that we as consumers use every day, and therefore I don’t see why you would take them out of the calculation for inflation… I’m just saying…
For What it’s Worth… I saw this article on Google search yesterday, and thought about how many times I’ve explained this problem that it probably made sense for you dear reader to hear it from somebody other than me, and who else could do that better than me? LOLA! Goldman’s views on this can be found here: US Debt Risks ‘Slow-Motion Collision’ With Fight Against Inflation (businessinsider.com)
Or, here’s your snippet: “Efforts to bring down inflation could collide with high debt loads, a Goldman Sachs warned, highlighting the implications for US debt.
In a note published Monday, analysts looked at developed economies like the US, Japan, Europe and the UK, and noted that higher rates, which have risen to battle inflation, are already pressuring government budgets via increasing interest costs.
As central banks deploy anti-inflation tools, including the Fed’s quantitative tightening campaign, they limit the ability for inflation to erode debt, Goldman added.
“Ultimately this risks a slow-motion collision between inflation targeting and high debt loads, where a loose fiscal stance skews inflation risk and thus interest rates to the upside until a fiscal correction arrests the process,” analysts George Cole and Sara Grut wrote.
A combination of high inflation and deep deficits would also likely mean low investor demand for government bonds, and high foreign ownership of debt is another risk factor, Goldman pointed out.
“This suggests the US and UK are the most obvious candidates for a duration risk premium repricing,” the note said, referring to the compensation a bond trader requires for taking on the risk that rates will change during a security’s lifetime.
The note comes as the outlook for US debt is changing. Deficits are widening, and the federal government is set to overspend by $2 trillion in fiscal year 2023.
In one quarter alone, the Treasury Department issued $1 trillion in new T-bills. And with the Fed removed as a key buyer, the Treasury has had to attract money from other corners of the bond market, forcing it to lift rates.”
Chuck again… Well there you have it… someone other than me, crying wolf at the funding of our debt and the costs to do so…
Market Prices 9/14/ 2023: American Style: A$ .6445, kiwi .5927, C$ .7395, euro 1.0735, sterling 1.2472, Swiss $ 1.1193, European Style: rand 18.9180, krone 10.7165, SEK 11.1302, forint 358.17, zloty 4.3154, koruna 22.7859, RUB 96.07, yen 147.33, sing 1.3604, HKD 7.8274, INR 83.04, China 7.2780, peso 17.13, BRL 4.9158, BBDXY 1,249.81, Dollar Index 104.73, Oil $89.67, 10-year 4.26%, Silver $22.62, Platinum $907.00, Palladium $1,262.00, Copper $3.87, and Gold… $1,907.87
That’s it for today… Well, no baseball for me tonight, I guess I’ll be stuck with Thursday Night Football.. We’re getting close to the beginning of fall, and I’ve always said that the Fall weather here in my neck of the woods, is the best season we have here, weather-wise… Chilly mornings give way to warm days, full of sunshine, and umbrella blue skies… The only problem with Autumn is that winter follows it, and I do NOT enjoy cold weather one iota! Well, the Big Bad Kansas State Wildcats come to Columbia Mo this Saturday, for a sold out game against my Mizzou Tigers… The Tigers will have their hands full with the Wildcats, and they’ll have to play error free football… Go Tigers, fight for Old Mizzou! I’m so excited about next week’s game, which will have Mizzou playing in St. Louis, and I’ll be attending with my sons! Let’s hope the Tigers are 3-0 when they take the field at the dome! The Doobie Brothers take us to the finish line today with their song, and my fave Doobie Brothers song: South City Midnight Lady… (there’s some personal meaning in these lyrics) I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and please with sugar on top, Be Good To Yourself!
Chuck Butler